Foundations of Management, Vol.

8 (2016), ISSN 2080-7279

DOI: 10.1515/fman-2016-0019 243

ARE SMALL AND MEDIUM ENTERPRISES (SMEs) PLANNING

FOR STRATEGIC MARKETING IN SOUTH AFRICA?
Louise van SCHEERS*, Khathutshelo Mercy MAKHITHA
University of South Africa, Department of Marketing and Retail, South Africa
*e-mail: vscheml@unisa.ac.za

Abstract: Substantial evidence shows that strategic marketing planning leads to increased small busi-
ness performance, yet most small business owners do not draw up a plan for their businesses.
This paper presents the results of a secondary research survey on strategic marketing planning of SMEs
in South Africa. They indicate that while the higher performing SMEs give a higher priority
to marketing than to other business functions, they are still sales- or production-oriented. The higher
performing SMEs are more aware of strategic planning tools. They compete with value-added products
and good buyer-seller relationships. The findings suggest that broad, small business marketing princi-
ples to some extent contribute to the success of SMEs.
Keywords: strategic marketing planning, South African SMEs, better performing SMEs, lack
of strategic planning know-how.

1 Introduction African economy and thus strategic planning will

Strategic planning is a process of envisioning a de-
sired future for the small business, thus making stra-
tegic decisions on its mission and objectives as well
as on allocating resources to pursue its chosen strate-
gy. Strategic planning therefore involves clearly
defining the small business’s mission and assessing
the current state and competitive landscape. Strategic
marketing planning, on the other hand, creates prod-
uct awareness and interest to ensure an enduring
customer engagement. It guides the small business’s
culture, products and pricing. According to
Goldstuck (2010), the total number of SMEs in
South Africa is just over 2 million and they contrib-
ute between 52 and 57% to nation’s GDP and pro-
vide about 61% to employment, according to Abor
and Quartey (2010). It is estimated that they employ
22% of the adult population in developing countries.
SMEs play a vital role in stimulating economic activ-
ity, job creation, and poverty alleviation, and their
general empowering of living standards has been
recognized both internationally and in South Africa
(Nieman, Hough and Nieuwenhuizen, 2003).
UNIDO (2016) also estimated that SMEs represent
over 90% of private businesses and contribute more
than 50% to employment and gross domestic product
(GDP) in most African countries. It is clear that
small business is considered important for the South
improve sustainability of these businesses.
Wang, Walker and Redmond (2008) observe that
strategic planning is generally more common in bet-
ter performing SMEs and those who engage in stra-
tegic planning are less likely to fail. Moreover,
SMEs that engage in strategic planning are also more
likely to be those enterprises that are more innova-
tive, that have more newly patented products, that
employ new process and management technologies,
and that achieve international growth. According
to Wang et al. (2008) it is well recognized that stra-
tegic planning is rare or nonexistent in a majority
of SMEs; however, the reasons for it are not well
understood. Yeboah (2012) argues that SMEs face
particular strategic decision-making problems. They
have limited resources in terms of time, finances and
professional expertise, which jeopardise their strate-
gic planning. It seems that they take a more evolving
approach to decision-making, which implies that the
decision-making process is not structured but rather
develop as they go along. According to Tan, Lin,
and Eze (2010), most small businesses lack a formal
mode of strategic planning. This clearly suggests that
the key reason for the failure of SMEs is not only
lack of access to finance, but also lack of strategic
planning. This is not necessarily due to lack
of know-how, but rather a lack of acknowledgement
244 Louise van Scheers, Khathutshelo Mercy Makhitha
of the importance of planning in the ordinary course
of business.
Hill (2001) observes that SMEs in Ireland and the
United Kingdom do engage in fairly sophisticated
strategic marketing planning. The research found
some evidence of a nonplanning culture in the opera-
tional practices of a few of the firms, particularly
in which opportunity-focussed individuals have
much influence. All of the respondents in our re-
search did engage in marketing planning with many
committed to three-year marketing plans and review-
ing the plans annually. Respondents to the research
clearly articulated an appreciation of its benefits and
value. As a general conclusion, the research contra-
dicts the nature of marketing planning in SMEs as
found by previous research, which argued that mar-
keting planning in SMEs is both underutilized and
misunderstood. Hills (2001) reflects the status quo,
in that small firms are more likely to be populated
with graduates with substantial theoretical
knowledge of the tools and techniques of formal
marketing and that SMEs that do not engage in for-
mal planning are fast becoming a minority. Howev-
er, in South Africa, it does not seem to be the case;
van Scheers (2010) established that a lack of market-
ing strategic planning skills in South African SMEs
has a negative impact on their success and contrib-
utes to the high failure rate. Based on this report,
it can be argued that South African SMEs do not
engage in strategic marketing planning. van Scheers
60%
50%
40%
30%
20%
10%
0%
Figure 1. Reasons why SME owners are in business
(2011) also argues that the improvement of market-
ing skills of small business-owners will solve unem-
ployment problems and rejuvenate a stagnating
economy.
According to Wang et al. (2008), it is possible
to provide a more fundamental explanation for the
apparent lack of strategic marketing planning.
The strategic marketing planning of the SMEs may
be closely related to owner-managers’ personally
defined “nonrational” motivations for being in busi-
ness for which strategic planning is perceived as
unnecessary. According to the research, motivational
factors can be categorized as either “pull” or “push.”
Pull factors are associated with owner-managers
having a strong positive internal desire go into
a small business; “push” factors are linked to similar-
ly strong desires but based on external negative rea-
sons. Overall, financially framed motives are often
secondary to more personal and internal drivers
as motivations for being in small business. Accord-
ing to the research, ownership motivations and rea-
sons for having a small business are central to under-
standing the planning practices in SMEs, and these
are an alternative explanation to the common focus
on barriers to strategic planning to account for the
lack or low levels of such planning in many SMEs.
In South Africa, the reasons and statistics for SME
business-owners being in business, according
to Goldstuck (2010), are indicated in Fig. 1.
Wanted to start business
Recognises an opportunity
No employment
 Are Small and Medium Enterprises (SMEs) Planning for Strategic Marketing in South Africa?
From the statistics, above it is clear that 80%
of South African SMEs in the established markets
falls into the “pull” category as described by Wang
et al. (2008) and therefore it could be argued that
these South African SMEs are indeed engaged
in strategic marketing planning. If South African
SMEs do engage in strategic marketing planning,
their understanding of the formal and conventional
process of strategic marketing planning and imple-
mentation must be investigated to ascertain reasons
for their high failure rate. This will be investigated
by the current research.
2 The importance of strategic marketing
planning
Rwigema and Venter (2004) regard the strategic
marketing planning phase as critical to success
of any business. The strategic marketing manage-
ment process or system has been designed to help
management both precipitate and make strategic
Figure 2. Strategic marketing planning
(source: Dludla, 2005)
Van Scheers (2011) points out that there is a lack
of availability of marketing experts and specialists
within the South African SME sector. Proper strate-
gic planning therefore does not take place, which
results in high rates of business failure (Global En-
trepreneurship Monitor (GEM, 2012). Lack of mar-
keting and poor strategic marketing planning are the
major reasons for SME failures (Hussaina and Wang,
2010). Dludla (2005) indicates that the small busi-
nesses still lack the ability to market their products
effectively. Van Scheers (2011) revealed that there is
245
decisions, as well as create strategic visions. Abor
and Quartey (2010) emphasizes that many strategic
blunders occur as a result of not implementing stra-
tegic planning in small business.
The strategic marketing planning process is a well-
researched field of marketing management and much
literature exists on the subject. The process of devel-
oping strategies has been described over the years
using various terminology including budgeting, long-
range planning, strategic planning, and strategic
market management. The different terminologies has
similar meanings and are often used interchangeably.
However, when they are placed in a historical per-
spective, some useful distinctions emerge. Strategic
planning, the emergence of which is associated with
the 1960s, 1970s, and 1980s, is concerned with
changing strategic thrusts and capabilities. However,
strategic marketing planning focuses on the market
environment facing the small business. In Fig. 2,
the elements of strategic marketing planning are
shown.
a positive relationship between the lack of strategic
marketing planning of SMEs and business failure.
According to Wang et al. (2008), SME business-
owners' motivations for being in business are central
to understanding the strategic planning practices
in SMEs and they are used as an alternative explana-
tion to the barriers to strategic planning to account
for the lack or low levels of such planning in many
SMEs. Goldstuck (2010) recorded that 80%
of SMMEs are in business because they wanted
to start a business or recognized an opportunity
to start a business.
246 Louise van Scheers, Khathutshelo Mercy Makhitha
If SMEs are engaging in strategic marketing plan-
ning processes, it could be argued that their planning
seems to be ineffective. The current research will,
as a main objective, investigate their understanding
of the formal and conventional process of strategic
marketing planning and whether the implementation
of their planning practices are indeed ineffective
or not.
The marketing strategy planning is the process that
can allow a small business to concentrate its limited
resources on the greatest available opportunities
to increase sales and achieve a sustainable competi-
tive advantage. A marketing strategy should be cen-
tered on the key concept that customer satisfaction is
the main goal. Kroon and Moolman (2007) believe
that lack of and poor marketing strategies are the
major reasons for the failure of SMEs. Siu (2000)
explains that there are established links among stra-
tegic marketing practice and eventual performance
outcomes of the small business.
Zontanos and Anderson (2004) argue that these prac-
tices are limited due to resource constraints in fi-
nance, personnel, skills, and attitude toward market-
ing. It seems to be a no-win situation because strate-
gic marketing planning contributes positively to
SME success and the ability to think strategically.
Small businesses still face strategic marketing plan-
ning challenges, which can and will ultimately de-
termine their future.
3 Strategic planning: the link with marketing
Small business owners find themselves sometimes
so preoccupied with the hard work of running mar-
keting programs, supervising staff, and sales force,
and attending to the day-to-day grind that they lose
sight of the big picture. However, it is essential
to step back now and then to gain perspective,
and engage in strategizing. The broad scope of stra-
tegic marketing planning includes:
 all the products/services that the company offers,
 all the markets the company serves,
 both environmental and internal variables,
 production, research, finance, and other organiza-
tional elements needed for success.
Strategic marketing planning looks beyond the im-
mediate circumstances, in the process clarifying
where the small business wants to be in the future.
This strategic perspective can be contrasted with the
tactical level (which looks at the performance
of specific products or markets over a shorter time
frame) and operational planning (which focuses
on the nitty-gritty of getting the job done). Small
businesses that succeed do so by creating and keep-
ing customers. They do this by providing better val-
ue for their customers than the competition.
The task of marketing management constantly is to
assess which customers they are trying to reach
and how they can design products and services that
provide better value (create competitive advantage).
The main problem with this process is that the envi-
ronment in which the small businesses operate is
constantly changing. So a small business must adapt
to these constant changes in the environment and
make decisions about how to change the marketing
mix in order to succeed. This process of adapting and
decision making is known as strategic marketing
planning.
4 Where does marketing planning fit in with
the overall strategic planning of a business?
Strategic planning is encompasses the overall direction
of the business. It is concerned with marketing and also
involves decision-making about production and opera-
tions, finance, human resource management, and other
business issues. The objective of a strategic plan is to
set the direction of a business and create a strategy
so that the products and services it provides meet
the overall business objectives.
In Fig. 3, strategic management models indicate the
complete strategic management and marketing process,
which begins with customer needs identification, eval-
uating the different environments with SWOT analysis
to make strategic choices, and create effective strategic
marketing plans.
 Are Small and Medium Enterprises (SMEs) Planning for Strategic Marketing in South Africa? 247

Identify Needs

Collect internal data  Collect internal data 

Analyze data Analyze data 

Identify system elements

Compile internal profile  Compile external profile

Bridge and Gap analyses
Vision  Vision 
Mission  How can gaps be bridged Mission 
Objectives  Operations 
Goals 
Existing Bridge 
Policy  PESTAI-model
Extended Bridge 
White paper 
Political 
Legislation  Alternative Bridge  Economic 
Social 
Technology 
New Bridge  Agriculture 
Industry 
Strategic choices 

SWOT analyses 
Operational strategy Control and evaluation

Organizational structure  Strengths
Weaknesses 
Opportunities 
Threats  Implementation 

Main strategy  Functional structure

Research Tools 
Short term goals 
Disciplines
Medium term goals 
Functional areas Sub management systems
Long term goals 

Futuristic modelling  Target groups 

Figure 3. Strategic management model

(source: www.themarketingprocessco.com. 2015)
248 Louise van Scheers, Khathutshelo Mercy Makhitha
As indicated in Fig. 3, strategic marketing planning
forms part of the functional areas. Marketing has
a key role to play in strategic planning, because it is
the task of marketing management to understand
and manage the links between the business and the
environment. For example, in many small business-
es, there is only one geographical market and a lim-
ited number of products (perhaps only one product!).
However, consider the challenge faced by marketing
management in a multinational business, with hun-
dreds of business units located around the globe,
producing a wide range of products. How can man-
agement keep control of marketing decision-making
in such a complex situation? Managers therefore rely
on a well-organized marketing planning process.
5 Develop a marketing strategy for SMEs
The benefits of a well-planned marketing strategic
planning are numerous. Small business owners often
rely solely on their intuition to make business deci-
sions. While this informal knowledge is important
in the decision-making process, it may not provide
you with all the facts you need to achieve marketing
results. A marketing planning strategy will help
in defining business goals and develop activities
to achieve them:
1) Describe your company's unique selling proposi-
tion (USP);
2) Define your target market;
3) Write down the benefits of your products or ser-
vices;
4) Describe how you will position your products or
services;
5) Define your marketing methods. Will you adver-
tise, use Internet marketing, direct marketing,
or public relations?
Marketing participants often employ strategic mod-
els and tools to analyze marketing decisions. When
beginning a strategic analysis, the 3Cs (corporation,
customer, competitors) can be employed to get
a broad understanding of the strategic environment.
An Ansoff matrix is also often used to convey
an organization's strategic positioning of their mar-
keting mix. The 4Ps (product, price, promotion
and place) can then be combined to form a marketing
plan to pursue a defined strategy.
6 Discussion
Secondary research indicates that strategic marketing
planning is the backbone for small business success.
While traditionally strategic marketing was associat-
ed with large businesses, small businesses also need
to employ strategic marketing planning in order
to survive (Blankson and Stokes, 2002; Hill, 2001;
Siu, 2000; Siu, et al., 2004). However, marketing
strategic planning in the small business is different
from marketing in the larger organization. Due to the
intensity of competition, changing market and cus-
tomer requirements, small businesses need to adapt
their marketing activities to reflect these changes.
Small businesses are competing in an environment
that is global in nature and scope, information rich
and knowledge based, which continue to influence
how they operate (Abimbola and Vallester, 2007).
Strategic marketing planning is the process of ana-
lyzing environmental, competitive, and business
factors and forecasting future trends in business are-
as, set objectives and formulating strategies, select-
ing target market in each business units, establishing
marketing objectives and development, implement-
ing and managing marketing program positioning
strategies – in effect, a marketing plan. Strategic
marketing planning determines how the small busi-
ness is going to compete against its major competi-
tors. Venter and Van Rensburg (2009) points out that
it involves determining the competitive advantages
that may arise as a result of the ability of the small
business to perform better than its competitors
in some areas. Walker, Boyd and Larreche (2016)
correctly indicate that the success or failure of a
marketing strategy depends on whether the strategy
fits the realities of the small business’s external envi-
ronment. It seems that it is therefore important
for SME owners to monitor and analyze opportuni-
ties and threats posed by factors outside the small
business before they could formulate a marketing
strategy.
Secondary research indicates that the success or fail-
ure of a marketing strategy depends on whether the
strategy fits the realities of the small business’s ex-
 Are Small and Medium Enterprises (SMEs) Planning for Strategic Marketing in South Africa?
ternal environment. However, as Stokes (2006)
points out, SMEs are generally known to have in-
formal marketing plans, which are short term in na-
ture and involve informal, unplanned activity that
relies on the intuition and energy of the owner-
manager. Secondary research also indicates that the
practice of strategic marketing planning can be lim-
ited due to resource constraints in finance, personnel,
skills, and attitude toward marketing. It does not
seem that they conduct situation analyses nor have
any knowledge of strategic marketing planning tools.
Thomas (2013) studied the strategic marketing prac-
tices of SMEs with specific focus on practices such
as establishing marketing objectives, identifying
market segments, marketing to specific target mar-
kets, engaging in product packaging activities with
other industry sectors, and working to a written mar-
keting plan. He indicates that SMEs fail to utilize
strategic marketing practices comprehensively. Stra-
tegic marketing practices such as knowledge of cur-
rent market conditions and consumer tastes were
positively related to SME performance (Julien and
Ramangalahy, 2003; Berthon, et al., 2008). Simpson
(et al., 2006) examines drivers of marketing effort
such as the presence of a marketing department
and marketing representation at the board level.
SMEs do not monitor and record the performance
of competitors’ performance.
It seems that the higher performing SMEs tend
to adopt a longer-term approach to planning and to
use strategic or annual marketing planning. This
research concludes that higher performing SMEs
tend to use strategic marketing planning more fre-
quently and pay more attention to comprehensive
situation analysis than their lower performing coun-
terparts. The findings suggest that broad, small busi-
ness marketing principles, to some extent, contribute
to the success of SMEs.
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